You can head off a lot of late payment before the invoice goes out, by agreeing terms in writing, checking who approves your invoices and sending each one the day the work is done. After that, make paying easy with direct debit or a payment link, follow up on a fixed schedule that starts before the due date, and use your legal right to statutory interest on late business invoices.
In this article
The short version
- Agree payment terms in writing before the work starts, and check who approves your invoices.
- Send the invoice the day the work is done, with the due date and how to pay.
- Use direct debit for regular work and a payment link for one-off invoices.
- Follow up on a fixed schedule that starts a week before the due date.
- On late business invoices you can charge statutory interest at 8% above base rate plus £40 to £100 compensation.
Before you send the invoice
Government-commissioned research published in July 2025 estimates that UK businesses are owed about £26 billion in late payments at any one time. Businesses affected by late payment spend an average of 86 hours a year chasing it. Some of that delay starts with how terms are agreed and how the invoice is sent.
Agree your payment terms before the work starts and get them confirmed in writing, even by email. If you don't agree terms, the law treats a business invoice as late 30 days after your customer receives it, or 30 days after you deliver the work if that's later. Agreed terms between businesses should usually be 60 days or less, and longer only if that's fair to both sides.
For a new customer, it's worth running a credit check before you give them credit, and asking for a deposit on larger jobs. Then find out how their invoices get paid: who approves them, whether they need a purchase order number, and when their payment run is. An invoice that arrives without a PO number, or goes to someone who can't approve it, tends to sit in a queue until somebody notices.
Send the invoice as soon as the work is done or the goods are delivered, with your terms, the due date, a unique invoice number and how to pay. Most payment terms count from the invoice, so a delay in sending it usually pushes back the date you're paid.
Make paying the easy option
A bank transfer your customer has to set up by hand is easy to put off.
For regular work, direct debit means you collect on the agreed date and your customer only has to set it up once. For one-off invoices, a payment link in the invoice and in every reminder lets your customer pay by card, Apple Pay, Google Pay or pay by bank without typing in any bank details.
With Adfin you can offer both. You can collect by direct debit without your own Service User Number (the number a business normally needs to collect direct debits itself) or bank facility, and send payment links by email, SMS or WhatsApp. Each customer can also have their own bank details for transfers, so their payments are matched to the right invoice and synced to Xero or QuickBooks.
Follow up before and after the due date
A consistent schedule tends to work better than chasing whenever someone remembers. Here's a simple one:
| When | What to send |
|---|---|
| A week before the due date | A short check that the invoice has been received and approved |
| On the due date | A reminder with the payment link |
| 7 days overdue | A second reminder, then a phone call |
| 14 to 30 days overdue | A formal letter setting out the amount, a deadline and what happens next |
You can adjust it for each customer. A reliable payer may only need the due date reminder, while a customer who's been late before is worth a call earlier.
If a customer raises a dispute, it helps to deal with it straight away, because a query left unanswered can become a reason not to pay at all. If a direct debit fails, retry it, and if it still doesn't go through, give the customer another way to pay before the next billing date.
When a business invoice is late, you can charge statutory interest at 8% above the Bank of England base rate, unless your contract sets its own rate. You can also claim fixed compensation of £40, £70 or £100 depending on the invoice size. None of this applies to consumers.
If a larger private-sector business still won't pay and you have fewer than 50 staff, you can complain to the Small Business Commissioner free of charge. Its recommendations aren't binding, and court is the last resort.
What to automate and what still needs you
Software is good at the repetitive part: sending every reminder on the right day, stopping as soon as an invoice is paid, retrying failed direct debits and adding interest. You'll still want to handle a customer in difficulty, a disputed line on an invoice, or whether to waive a late fee for a client you want to keep.
Adfin's essential credit control is free, with unlimited reminders over email, SMS and WhatsApp. Its collection agents, part of enhanced credit control at 0.3% per paid invoice when used, adjust the timing and channel for each customer and can add statutory interest to overdue business invoices, all within rules you approve. You can pause chasing for one customer while you sort something out.
To start this month:
- Put your payment terms and how to pay on every invoice.
- Ask your five largest customers who approves your invoices and when they pay.
- Move regular customers onto direct debit.
- Add a payment link to every invoice and reminder.
- Set one reminder schedule and stick to it.
- Check your overdue balance and average days to pay once a month, so you can see whether the changes are working.
Common questions
What is the quickest way to reduce late payments? Agree terms in writing before you start, invoice the day the work is done, and give customers a payment link or direct debit so paying takes very little effort.
How long does a business customer have to pay an invoice in the UK? Whatever you agreed, which should usually be no more than 60 days between businesses. If nothing was agreed, the invoice is late 30 days after your customer receives it or you deliver the work, whichever is later.
Can I charge interest on a late invoice? Yes, on business invoices, unless your contract sets its own interest rate. Statutory interest is 8% above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 per invoice.
Should I send a reminder before the due date? It often helps. A short check a week before the due date can catch missing purchase order numbers and approval problems while there's still time to fix them.
When should I escalate an unpaid invoice? If reminders and a call haven't worked after two to four weeks, send a formal letter with a deadline. If you have fewer than 50 staff and a larger private-sector business won't pay, the Small Business Commissioner may be able to help.
Can software stop late payments completely? No, but it can make sure every reminder goes out on time and stops once the invoice is paid. Disputes and customers in difficulty still need someone to talk to them.
Sources
- British Business Bank - How to deal with late payments (accurate as of October 2026) https://www.british-business-bank.co.uk/business-guidance/guidance-articles/finance/how-to-deal-with-late-payments
- GOV.UK - Late commercial payments: charging interest and debt recovery (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery
- Department for Business and Trade - Late payments research: impact on the UK economy (accurate as of October 2026) https://www.gov.uk/government/publications/late-payments-research-impact-on-the-uk-economy
- Office of the Small Business Commissioner - FAQs (accurate as of October 2026) https://www.smallbusinesscommissioner.gov.uk/faqs/
- Bank of England - The interest rate (Bank Rate) (accurate as of October 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- Adfin - Pricing (accurate as of October 2026) https://www.adfin.com/pricing
